In a way this rule sums up the beginning and the end of all trading and investment rules. It applies equally to a trader and an investor. Like the old quote, “If you don’t know where you are going, it does not matter how fast you run”. Your objective should be defined clearly. Are you looking to beat the index? Are you looking to better debt? Are you only keen on capital? Or do you want multi-baggers?
Defining your investment goal
This rule, in a way, sums up the crux of trading and investing. When I had asked a retired officer, why he wanted to trade in the market, his off-the cuff response was, “I have a lot of spare time”. This kind of a goal can be disastrous. You need to clearly define what you plan to achieve in the market. If you do not define your goal, you are unlikely to have a target to work towards. Continue reading